The "internal correction" in the stock market continued today with momentum stocks falling while large-cap value-type stocks held up. The red-hot biotech sector fell by 3%. Other big losers included Facebook, First Solar, Salesforce.com, Expedia, and Netflix.

Initial jobless claims climbed to 326,000, up from 310,000 a week ago. This was higher than the 319,000 expected by economists. "The key question now is whether the run of relatively low numbers marks the new trend or was just a temporary diversion," says Ian Shepherdson, chief economist at Pantheon Macroeconomics. "We are inclined to think that the trend probably is falling, but quite slowly. Either way, expect volatility over the next few weeks as a result of the shifting timing of the Easter holiday from year to year, which causes problems for the seasonal adjustment process. The real trend will be clearer next month."

The U.S. trade deficit unexpectedly widened to $42.3 billion in February from $39.3 billion in January. Economists were expecting the deficit to narrow to $38.5 billion. "Some of the February weakness probably reflects weather-related transport delays, and the ISM export orders index points to firming in overseas demand recently that should support some improvement in exports in coming months, but the trade numbers on both sides of the ledger are looking very weak in Q1," said Morgan Stanley's Ted Wiesman.

The ISM services index climbed to 53.1 in March from 51.6 in February. This was a hair below the 53.5 expected by economists. The employment subindex rose to 53.6 from February's 47.5 reading, marking the biggest gain on record for the series as companies returned to hiring after last month's reduction in headcount.

Barclays' Cooper Howes summed up some of the ISM's anecdotes: “Respondents reported lingering effects of adverse weather in March, with some respondents saying that “cold weather played more havoc on revenue” and others reporting that weather led to “lost business days/business travel.” Some respondents in the health care sector also mentioned effects related to the implementation of the Affordable Care Act, noting that “healthcare reform continues to adversely impact hospital projected/actual revenue.”

Federal Reserve Board governor Jeremy Stein unexpectedly resigned today. In a letter to President Obama, Stein said he would return to his "teach[ing] position in Harvard University's department of economics."